Monday, August 16, 2010

The land grabbing - who profits ?

Howard Buffet , the son of the one of the richest billionaires in the world makes this interesting observation about the great African Land Grab

"It is estimated that 50 million hectares have already been leased to foreign entities with at least 20 African countries considering similar deals. Some of these leases—99 years at $1.00 per hectare—are unbelievable deals. But they are only available to a select few. Local farmers—people who struggle to feed their families, gain access to fertile land and secure water for both personal consumption and agricultural activity—are not eligible for the deals being promoted in countries where millions of people remain dependent on food aid.

Just a few months ago I was personally offered an equity stake in a land deal being brokered by a hedge fund. I was assured that the partners would receive cash up-front with no personal liability. I was also promised that the host government would provide 70 percent of the financing, all utilities, and a 98-year lease requiring no payments for four years. The cost? $2.91 per acre per year after four years. Another fund provided a prospectus that claimed it would generate returns of between 15 and 20 percent. U.S. agricultural land has averaged a return of about six percent over the past thirty years. Therefore, these deals are either that good for investors, or the managers of these funds are misrepresenting the facts. If I didn’t know better, this would sound like a great opportunity! But here’s what I’m sure of: these deals will make the rich richer and the poor poorer, creating clear winners who benefit while the losers are denied their livelihoods."

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